S. African owner buys Centum stake in Kenya Wines Agencies

The South African owner of Amarula and Viceroy brands is now the majority owner of Kenya Wine Agencies Ltd (Kwal) after buying out investment firm Centum in a deal estimated at Sh1 billion.

Distell yesterday announced it has acquired Centum’s entire 26.43 per cent stake in Kwal for an unknown value; bringing to 52.43 per cent its ownership in the wine maker and alcoholic beverages marketer.

“Spirits has been the fastest growing segment of Kenya’s alcohol industry and growth is anticipated to remain robust,” said Mr Donovan Hegland, managing director of Distell Africa.

“Our strategy is to expand geographically through acquisitions of and/or partnerships with those who have leading brands, rich heritage, and strong platforms,” Mr Hegland said in a statement. The Stellenbosch-based brewer first acquired a 26 per cent stake for Sh860 million from the Kenyan Government, which owns Kwal through the Industrial and Commercial Development Corporation.

State-backed financier ICDC owns a 42.65 per cent stake in Kwal, with distributors having 0.92 per cent.

There is an ongoing sale of 3.84 million shares or four per cent stake at a price of Sh34.46 a piece to staff under an employee stock ownership plan.

The acquisition comes barely three months after Kenya’s antitrust regulator granted Kwal a five-year exclusive deal to be the sole importer and distributor of 16 brands made by Distell.

The Competition Authority of Kenya in December allowed Kwal to solely import and distribute the brands made up of brandy, wine and whiskey from the South African company.

Distell brands such as Amarula, Viceroy, Drostdy-Hof, Two Oceans, and Chamdor juices, account for half of Kwal’s turnover, according to regulatory filings with the competition watchdog.

Kwal sold about eight million litres of alcoholic beverages in 2016; the brewer disclosed.

Kwal’s iconic brands include Kingfisher, Kibao Vodka, Caprice wine, Hunters Choice, Simba Cane, Beehive brandy, Yatta Grape Juice and Yatta Wines, which make up the other 50 per cent of sales.

The company enjoyed a monopoly manufacturing and distributing wines and spirits until liberalisation of the Kenyan economy in 1992/1993, exposing Kwal to stiff competition.

Kwal is banking on Distell’s backing to fend off rivalry in Kenya’s highly attractive industry.

Head-to-head battle

Kwal is now locked in a head-to-head battle for market share with rivals such as East African Breweries Ltd, Keroche, London Distillers, Wines of the World, and Africa Spirits, who manufacture or market imported alcoholic and non-alcoholic beverages.

Distell first signed a deal in 1998 with Kwal to distribute its products in Kenya. But in 2012, the South African firm threatened to terminate the partnership and enter the Kenyan market on its own, but a sweetheart saw Distell buy a controlling stake in Kwal.

READ: Kwal employees shun shares offer in privatisation bid

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